Chat with us, powered by LiveChat Exercise 10 Consider the special case in uhich everyone has the same indif- ference curve map and the same endoument-that is, (wnl, wna) = (IK/N,w5/N) for all n. Describe a CE One important result that we can state (and prove) is a version of Adam Smith's invisible-hand proposition Proposition 1 If(n, n) forn 1,2 for n= 1,2, , N is Pareto efficient. N is a CE allocation, then(n, ên) Here is an outline of a proof by contradiction. Because (n, en2) for n = 1,2, , N is a CE allocation, there is a price p = (P1,P2) such that nen2) for 1,2, V and is a CE. If ne2 for 1,2, N is not Pareto efficient, then there exists another allocation, call it (n,n2) for n-1,2, N that is Pareto superior to (ni,) for n1,N and is feasible It follows from Pareto superiority that there is some person, say person i, who strictly prefers (ai,a2) to (a1, a). Therefore | Writedemy

Exercise 10 Consider the special case in uhich everyone has the same indif- ference curve map and the same endoument-that is, (wnl, wna) = (IK/N,w5/N) for all n. Describe a CE One important result that we can state (and prove) is a version of Adam Smith’s invisible-hand proposition Proposition 1 If(n, n) forn 1,2 for n= 1,2, , N is Pareto efficient. N is a CE allocation, then(n, ên) Here is an outline of a proof by contradiction. Because (n, en2) for n = 1,2, , N is a CE allocation, there is a price p = (P1,P2) such that nen2) for 1,2, V and is a CE. If ne2 for 1,2, N is not Pareto efficient, then there exists another allocation, call it (n,n2) for n-1,2, N that is Pareto superior to (ni,) for n1,N and is feasible It follows from Pareto superiority that there is some person, say person i, who strictly prefers (ai,a2) to (a1, a). Therefore

02 May Exercise 10 Consider the special case in uhich everyone has the same indif- ference curve map and the same endoument-that is, (wnl, wna) = (IK/N,w5/N) for all n. Describe a CE One important result that we can state (and prove) is a version of Adam Smith’s invisible-hand proposition Proposition 1 If(n, n) forn 1,2 for n= 1,2, , N is Pareto efficient. N is a CE allocation, then(n, ên) Here is an outline of a proof by contradiction. Because (n, en2) for n = 1,2, , N is a CE allocation, there is a price p = (P1,P2) such that nen2) for 1,2, V and is a CE. If ne2 for 1,2, N is not Pareto efficient, then there exists another allocation, call it (n,n2) for n-1,2, N that is Pareto superior to (ni,) for n1,N and is feasible It follows from Pareto superiority that there is some person, say person i, who strictly prefers (ai,a2) to (a1, a). Therefore

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Exercise 10 Consider the special case in uhich everyone has the same indif- ference curve map and the same endoument-that is, (wnl, wna) = (IK/N,w5/N) for all n. Describe a CE One important result that we can state (and prove) is a version of Adam Smith’s invisible-hand proposition Proposition 1 If(n, n) forn 1,2 for n= 1,2, , N is Pareto efficient. N is a CE allocation, then(n, ên) Here is an outline of a proof by contradiction. Because (n, en2) for n = 1,2, , N is a CE allocation, there is a price p = (P1,P2) such that nen2) for 1,2, V and is a CE. If ne2 for 1,2, N is not Pareto efficient, then there exists another allocation, call it (n,n2) for n-1,2, N that is Pareto superior to (ni,) for n1,N and is feasible It follows from Pareto superiority that there is some person, say person i, who strictly prefers (ai,a2) to (a1, a). Therefore

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